Elon Musk has declared a foundational rebuild of his artificial intelligence company, xAI, stating it "was not built right first time around." The admission comes amid a steady departure of the startup's original architects, leaving only two of its 2023 co-founders alongside Musk.

The exits, including researchers Jimmy Ba and, this week, Zihang Dai and Guodong Zhang, coincide with preparations for a potential record-breaking SpaceX public offering this year. The two firms merged in a $1.25 trillion deal just weeks ago, valuing SpaceX at $1 trillion and xAI at $250 billion.

Simultaneously, Musk is scrambling to address competitive gaps. After observing the success of rivals like OpenAI and Anthropic in coding tools, he ordered job cuts at xAI and directed a review of past hiring decisions to re-contact rejected candidates. SpaceX, meanwhile, hired two programmers from the sought-after AI coding startup Cursor.

xAI's flagship product, Grok, is under government investigation in several countries for enabling the generation of non-consensual sexual imagery. Despite this, it has secured U.S. Defense Department and General Services Administration contracts under the Trump administration.

The company is investing billions in data center infrastructure in the Memphis area, recently securing a permit for a major natural gas power plant in Mississippi. Tesla, Musk's primary source of liquid wealth, is a key partner, integrating Grok into its vehicles and robots and selling xAI hundreds of millions in backup batteries.

Musk and xAI did not respond to requests for comment.

Source: CNBC